Refinancing First and Second Mortgage Loans

How to Refinance a First and Second Mortgage Together

Refinancing first and second mortgage loans offers lower rates, reduced payments and the convenience of only paying one mortgage a month. A refinancing and consolidating mortgage loan is a very difficult task for traditional lenders, but this is one of our niches at Nationwide. New home refinancing loans have become available with new refinance opportunities for combining mortgages into one low rate payment.

Find lenders and brokers that offer several practical refinance solutions for combining 1st and 2nd mortgages into a reduced rate loan that could save you hundreds of dollars a month. Our home refinance programs provide you the ability to roll your high interest second mortgage into a new low rate mortgage. Refinance your 1st and 2nd Mortgage together for one low payment with no private mortgage insurance.

80% – 1 Loan- Mortgage Refinance
(Combine 1st and 2nd mortgages into one mortgage under 80% Loan to Value)
90% – 1 Loan Mortgage Refinance
(Combine 1st and 2nd mortgages into one mortgage under 90% Loan to Value)
100% – 1 Loan – Mortgage Refinance – NO PMI
(1st and 2nd mortgage refinancing with new mortgage up to 100% Loan to Value)
110% Mortgage Refinance -NO PMI
(1st and 2nd mortgage refinancing with new mortgage up to 110% Loan to Value)
Fixed Rate Consolidating Home loans for Lower Payments
1st and 2nd Mortgage Refinancing

•Fixed Rate Refinance Loans
•Refinance Mortgages to 110%
•Debt Consolidation Refinancing
•Jumbo Home Refinancing
•Consolidate 1st & 2nd Mortgages
•Consolidate all of your debts into one low monthly payment.

•No PMI & No Mortgage Insurance
•30 or 40-year amortization loans
•Interest Only Payment Option loans

Refinancing and Combining First and Second Mortgage Interest Rates

In recent times, numerous financially constrained buyers have favored 80-20 combo piggyback loans, a structure involving a primary loan covering 80% of the property’s value and a secondary loan addressing the remaining 20%. Since interest on a mortgage loan is tax-deductible, while mortgage insurance is not, the post-tax expense of piggyback loans often proves lower than loans incorporating private mortgage insurance (PMI).

The drawback of a combo loan lies in its association with potentially riskier loan types. Although the initial 80% loan is commonly a fixed-rate loan, various second mortgage types, such as variable rate home equity lines (HELOCs), are utilized for the remaining 20%. The concern arises when, during the first adjustment, the rate may escalate by as much as 6%. On a positive note, fixed interest rates remain highly attractive, and the increase in home values enables borrowers to leverage newfound equity for a combined first and second mortgage loan, facilitating the refinancing of both loans concurrently.

By 2024, one in four adjustable-rate mortgages (ARMs) is projected to adjust. Opting for combo refinancing proves sensible when there is a minimum of 20% equity accumulated in the home. However, if combining the first and second mortgages yields less than 20% equity, the new loan is likely to incur costly PMI, potentially resulting in higher long-term payments. In such instances, second mortgage refinancing emerges as a more prudent strategy. In her article, “Refinance or Second Mortgage? Combining 1st & 2nd Mortgages Together,” Lynda Nelms, an accomplished loan officer and author of the renowned column “Ask Lynda,” details a scenario where a second mortgage refinance proved to be the superior solution for one of her clients.

As highlighted by Lynda in her article, contingent on the home equity program, second mortgages may entail several thousand dollars in closing costs. Additionally, she notes that most fee-free second mortgages with no points necessitate credit scores exceeding 700, and the combined loan-to-value (CLTV) generally needs to stay below 90%. However, a slight increase in interest rates can potentially offset some fees, offering a means to circumvent certain charges by accepting a slightly higher rate.

The consensus among experts is that refinancing an 80-20 combo loan to a less precarious loan type within 2-3 years is advisable to avoid potential rate hikes. Whether opting for the consolidation of the first and second into a single mortgage or choosing to refinance the second depends on the accrued equity in the home since its purchase.  Article was written by Maria Ny.